Fcc Cuts Rates On Cable Tv Basic Service Costs Could Roll Back 10%

April 02, 1993|by SUSAN TODD, The Morning Call

A decision by the Federal Communications Commission to cut basic cable rates by 10 percent and regulate runaway cable costs has mixed implications for the Lehigh Valley area, cable operators and advocates said yesterday.

Susan Yee, vice president of Twin County Cable in Northampton, said the FCC ruling would not affect customers served by her company because of competition Twin County faces from Bethlehem-based Service Electric Cable TV Inc. and Sammons Communications in Easton.

"I have not seen the ruling," Yee said yesterday, "but based on what I know, we wouldn't be affected."

The new rates will apply only in areas where the FCC has found no effective competition among cable operators. The commission estimates that up to three-quarters of the cable systems across the country do not face competition.

Also under the ruling, cable systems whose rates are at or below the reasonable level to be determined by an FCC formula will not have to reduce their rates. But their ability to increase cable rates will be subject to regulatory caps.

Palmerton-based Blue Ridge Cable Television Inc. has no competition in much of the area it covers, making it just the sort of company the FCC wants to regulate. But whether the company's rates already are low enough to escape further reductions will depend on a per-channel cost formula that the FCC has yet to release.

Dick Semmel, general manager at Blue Ridge, said his company has reduced its basic service rate from $13 to $10 a month. That service provides customers 18 channels and programming from New York City, Philadelphia, Scranton and Wilkes-Barre.

"What they're trying to do is to make cable accessible to the public for a very low price," Semmel said. "We lowered the rate, and it looks like we were going in the right direction."

Since last fall, when Congress passed legislation authorizing the FCC to regulate cable rates, the industry had been anticipating the rules adopted yesterday.

The FCC's ruling effectively returns the cable television industry to government price supervision, ending a 6-1/2-year period when operators were able to charge whatever rates they wanted. The 10-percent cut will apply to basic cable service, which can vary from one company to another and will reduce rates that were in effect on Sept. 30, 1992.

Any increases since then will be erased under the ruling. Any rate increases -- except for pay-per view program services and equipment -- scheduled to go into effect this month will be frozen for 120 days.

Officials said yesterday that the 10-percent reduction represents the average difference between competitive and non-competitive rates. The information was based on a rate survey the FCC did last fall.

The initial step of the FCC's ruling is expected to save consumers $1 billion, according to the commission.

Stan Singer of the Pennsylvania Cable Television Association said lawyers studying the ruling indicated yesterday that the FCC had not released "benchmark" per channel costs that will take into account the number of customers a company serves, whether the area is urban or suburban, and the miles of cable line it has laid.

"If they can justify that they need costs to be over the benchmark, they can appeal, but there's no guarantee that will be granted," Singer said.

Singer said what happens to rates and the extent of regulation may also depend on the public's reaction to the service it receives. "There are a lot of communities, where even though there's one major system, there's not a lot of aggravation and there may be no changes."

Singer did not have information on the number of cable companies that operate without competition in Pennsylvania.

Yee of Twin County Cable said the mandatory rate structure could lead some companies to modify their basic service, limiting the number of stations and possibly increasing the cost for special services.

The exact implications of the ruling were unclear yesterday to many operators and to others who monitor the industry.

"Without having seen the written details, it is very difficult to say precisely what the commission has done," James P. Mooney, president of the National Cable Television Association, said in a prepared statement.

The new rules will make it difficult for operators to provide subscribers with quality service and programming, Mooney said. "These things are expensive to provide," he said, "and rate rollbacks, while always temporarily popular, almost always are destructive to quality.

"We're obviously going to comply, after we know what constitutes compliance," Mooney said. "If ... the commission's actions exceed its authority under the statute, I have no doubt that these issues ultimately will end up in the courts."

Charles Sager, general manager of Sammons' station in Emmaus, refused to comment on the possible effects of the ruling yesterday. "We will be studying the FCC's information, and we will have comments at a later date," he said.